Japan set to seal oil deal with Iran

Japan plans to sign a contract with Iran to help in developing oil fields, with six Japanese trading houses set to make advanced payments for the state-backed project, a report said Sunday.

Japan plans to sign a contract with Iran to help in developing oil fields, with six Japanese trading houses set to make advanced payments for the state-backed project, a report said Sunday.

Backed by syndicated loans from the Japan Bank of International Cooperation, the firms will set up a company in January to make advanced payments totalling three billion dollars to Iran, the Nihon Keizai Shimbun reported.

Under the plan, the consortium will provide Iran's state-owned oil corporation with one billion dollars syndicated loans annually over the next three years. Serving as payments for Iranian crude oil, the first loan agreement is set to be inked in February 2001.

Iran is expected to use the funds for its development projects in oil, gas and petrochemicals, the newspaper said.

The deal followed an agreement during Iranian President Mohammad Khatami's visit to Tokyo in November, which gave Japan preferrential negotiating rights to develop part of one of the largest oil fields in the Middle East.

The preferential deal allowed the consortium to negotiate exclusively with Iran to acquire the developing and operating rights for specific areas of the Azadegan field in southwestern Iran.

Japan's payments for the oil will effectively serve as a financial aid to Iran in exchange for long-term stable supply of oil, the daily said.

The trading houses in the consortium are Mitsubishi Corp., Mitsui and Co., Sumitomo Corp., Itochu Corp., Marubeni Corp. and Tomen Corp. Major Japanese oil distributors may also take part in the project, the report said.

The field is said to have reserves of more than 26 billion barrels, making the deal Japan's biggest oil development project yet. - (AFP)